I think that the American public has largely tuned out the myriad studies showing that most households are woefully under-saving for retirement. Even if we’d prefer not to think about this issue, however, it is crucial to regularly check on how we are doing. There are two major questions. First, during your working years, are you saving enough? Second, during retirement, how much income can you sustainably plan to draw from your savings each year? The good news is that there are some simple tools that you can use to do a fast estimate of how you are doing, how much you need to save to stay on track, or how to get on track. Continue reading
Guest post by Contributing Editor, John Graves.
Editor’s Note: John Graves has been an independent financial advisor for 26 years. He is one of the two owners of The Renaissance Group, a Registered Investment Advisor based in Ventura, CA. John’s book, The 7% Solution: You Can Afford a Comfortable Retirement, was published in 2012. When I read this book, I was impressed with John’s approach and thinking and I recommend it as a good read. I contacted John and asked if he would consider contributing to this blog. After we bounced around some possible topics, he sent me the following piece that describes his process for designing income plans for retirees. Continue reading
I have just finished reading The Clash of Generations: Saving Ourselves, Our Kids, and Our Economy, the new book authored by Boston University Economics professor Laurence Kotlikoff and well-known financial journalist and advisor, Scott Burns. This is a truly important book, and I hope that it will be so widely read as to inspire a meaningful widespread dialog among individuals, families, and policymakers. Continue reading
Guest Blog by Craig Guillot, Quicken.com.
With the start of 2012, there are a number of new tax laws and adjustments. From higher tax bracket thresholds and standard deductions, you’ll have some positive and negative changes to your taxes this year.
Higher federal income tax-bracket thresholds
A number of tax changes in 2012 have been due to standard inflation-related adjustments. Continue reading
Well-known financial columnist Robert Powell has a recent article in MarketWatch titled, “Retirement in America is ‘Endangered.” The motivation for this piece, he writes, is that retirement preparedness is a crucially important topic that was missed in the recent State of The Union address by President Obama.
Powell goes on to list the key problems with the current ‘state of retirement’ in the United States:
1) Under-funding of Social Security
2) Low savings rates
3) Poor market returns over recent years
4) Inadequate levels of financial literacy
5) Half of American workers have no employer-sponsored retirement plan
All of these issues are critically important. In just one or two generations, we have shifted from a society in which employers provided lifetime retirement income via traditional pension plans, to one in which individuals now must manage every aspect of their financial futures, including how much to save and how to invest their retirement savings. The good news is that each of these five issues can be solved if we have the will to solve them. Continue reading
The Center for Retirement Research at Boston College recently came out with a new analysis of how much Americans need to save in order to be able to maintain a reasonable lifestyle in retirement. Published in November 2011, the report is titled “How Much to Save for a Secure Retirement.”
The study starts with an assumed target “replacement rate” that represents the fraction of pre-retirement income that an individual will be likely to need to maintain their lifestyle in retirement. A long-term project at Georgia State to estimate required replacement rates provides the numbers that serve as the foundation of the CRR paper. The Georgia State research suggests Continue reading
Social Security is a hot topic in the economic and political landscape these days. Many reports indicate that Social Security’s finances are getting worse as the economy continues to struggle and as the “Baby Boomer” generation begin to retire. To add to the confusion, Texas Governor Rick Perry is standing by his assertion that Social Security is a Ponzi scheme—a fraud being perpetuated on today’s young people by old people. While I’m not sure this is necessarily true, I recently came across a fascinating history of the Social Security program that will help us understand how we got to where we are in the first place.